It is no secret for those of us involved in UK open banking from its start that top UK Banks have and continue to drag their feet to truly meet open banking/API performance expectations as confirmed by the Finextra news report from APImetrics. While this
report is sadly not completely news, it confirms the lack of commitment from UK’s top three.
Why is this happening? Because the likes of HSBC, Barclays and Lloyds continue to “bank” on their traditional ways and fail to see three critical tsunamis coming their way: 1) innovation is coming (the term “will come ” is now outdated) with or without them
2) the GAFA threat is now real 3) challenger banks are taking market share and full advantage of the open market.
These 3 banks (though I am sure there are more) are not realising that there is a substantial commercial opportunity for them in also taking advantage of open banking data. This is an opportunity for banks to reinvent themselves and gain consumer trust through
slick products and services. The Economist this past week had on their cover “Tech’s Raid on the Banks”. A fascinating story on how disruption has finally reached banking but not only me, others have been saying that banks need to wake up and join the collaborative
movement of open banking for quite some time. It is clear that this is the time of the consumer seeking products and services valuing the power of its own data and its definitely hitting the banking sector. Those that realised this early have taken a huge
leap on the market. Perfect examples are in China or even the news of the likes of Facebook and Amazon now actively going after chunks of the payments/banking processing market.
As also stated in The Economist report, the excuse of how innovation threatens the stability of the long-pampered banking system is no longer valid for a variety of reasons. The actual banking process could remain on the banks lap or very likely to be under
the responsibility of a large fintech taking away the excuse of stability issues. Nevertheless, PSD2 and Open Banking regulations clearly outline the who the what and the why on these legal aspects to ensure they protect everyone involved. But primarily,
as I stated in a presentation last year…”this is not about the banks”, it’s about the consumer. This is where these stubborn banks are not realising that open banking is all about collaborative innovation that in the end will create products and services that
we are yet to see but that consumers will want and will not care whose behind it. These will not be traditional products that we will need to go to a brick and mortar branch to obtain. These will be completely online as they are today available for other uses.
These products and services will be created and rolled out without the need of the ridiculous procurement processes that banks have and continue to put fintechs through. The other big winner are the challenger banks that are collaborating with IT firms of
all sizes and being given the opportunity to go after the market with little challenge which they are certainly taking advantage of it.
So, in summary, the crazy thing is that just about everything I am writing is not news, it is well known to most of us except to the stubborn traditional UK banks that refuse to want to embrace innovation. But as said in other blogs, the rest of the world
are realising the opportunity and are starting to move on it. Unfortunately the UK's banking sector is slipping in being able to lead the world on this subject it could easily be at the forefront having the world's fintech hub in London.
Will we see the end of (big) banks as we know them?